Blockchain as a Design Thinking 2.0 Tool

I recently participated in an IDG-sponsored roundtable discussion on blockchain with representatives from the technology, consulting and academic worlds. All panelists agreed that we will see widespread adoption of blockchain technologies in business and beyond – but likely in ways we haven’t yet thought about.

One common observation was that the business relevance of blockchain technologies was often addressed incorrectly, with many organizations approaching it from the “we have a new technology, now what can we do with it?” point of view. Use cases are often driven by start-ups and the tech/crypto-community looking to monetize their solutions by issuing their own crypto-tokens and crypto-currencies with so-called ICOs (initial coin offerings).

Many of these start-ups lack a deep appreciation of the business challenges that keep decision makers awake at night. Last week, I spoke to a venture manager of a large automotive supplier and global leader in IoT who told me his organization had vetted 200 blockchain start-ups without investing in a single one. None, he said, could prove significant business impact and value.

Blockchain Brainstorming

On the business leaders’ side, adoption will happen only when senior executives open their minds to how blockchain could apply to their business. We’ve introduced the idea of applying design-thinking principles to blockchain in various meetings with business executives of large Fortune 500 companies. This approach led to some eye-opening ideas on how blockchain thinking can disrupt the business, even though the ideas didn’t necessarily require implementing blockchain technologies as a first step.

The fact is, design thinking is not just about brainstorming; it’s also about figuring out what to brainstorm about. Using blockchain thinking, business leaders can learn to take an “intellectual” approach to brainstorming about their business. Consider the words of Michel Foucault, the famous French philosopher:

“The work of an intellectual is (…) to re-examine evidence and assumptions, to shake up habitual ways of working and thinking, to dissipate conventional familiarities, to re-evaluate rules and institutions.“

In other words, businesses need to look at the rules shaping their industry or company, as well as their habitualized practices of executing business processes that can be disrupted by blockchain. They need to dismantle old conceptions of (re-)using or valuing products and assets – and the purpose and value of institutions themselves.

Undoing Institutional Power

With the emergence of blockchain, Foucault’s work has regained relevance, especially with respect to blockchain’s potential for undoing institutions’ centralization of power. (For example, see Mihaela Ulieru’s publication on how blockchain can even disrupt centralized institutions of the sharing economy like Uber and Airbnb.) Blockchain shifts control to the network’s edge (people, apps, machines, edge devices, etc.). In this way, it is strong in being weak – and this is how it creates trust. (Or to paraphrase game theorist and Nobel Prize winner Thomas Schelling, “weakness can be a strength.”)

Blockchain’s key features – privacy, security, immutability, transparency, reliability, process integrity, open participation – can be seen as design elements to completely reinvent how business can be conducted.

A Blockchain Design Thinking Framework

We’re taking a three-step approach to applying design thinking practices: 1) ideating broadly using “blockchain thinking;” 2) shortlisting feasible ideas; 3) and then actually implementing the ideas into the core process and IT landscape to capture business value. We’re working on a framework that will cover four business elements:

Resources and assets: Blockchain will enable the “industrial sharing economy.” For many companies, assets (both tangible and intangible) are underutilized, extracting significant value from the global GDP. Blockchain capabilities such as micro-transactions, smart contracts and a trusted record of usage can broker these assets and resources globally, creating significant economic wealth.

Processes: Processes today are mostly proprietary to companies, customized and configured in ERP systems. They rely largely on proprietary, often inconsistent, master data. Blockchain’s decentralized common ledger provides a standard protocol for doing business, which offers the potential to “open up the insides of a company.” Customers and suppliers, for example, could integrate themselves into the process and systems architecture in a more direct way. Smart contracts may become the processes of the future; they could contain the business rules that are inherent in processes, and execute on a common blockchain protocol and a shared ledger. In the near future, blockchain – potentially in combination with RPA (robotic process automation) – will eliminate processes that involve retrieving and checking on data, information or documentation (e.g., supply chain finance, parts authentication, manufacturing and payment/settlement transactions).

Products and services: As products become smart, connected and more personalized and customized, there is an increased need for a digital representation of the physical world. This “digital twin” is often intellectual property and of significant value. However, the authenticity of the product information also needs to be guaranteed. Using blockchain technologies, an immutable history of any product can be created: a digital product memory that logs provenance of material, manufacturing quality data, the design/designer, ownership, rights, usage, maintenance requirements, etc. This will create new markets, enable more transparency around products to drive product improvements, and make products more personal. Authentic products are high in demand, following the trend of “essentialism” in product design (and life), i.e., to be “simple, clear and meaningful.”

Customer experience: Companies across industries are already demanding more autonomy, greater clout and control over business transactions. This includes the sharing of personal information and products and resources across ecosystems (think compute bandwidth, solar energy, cars, housing and design IP). Customers want more say over payment terms to justify the value they receive and to more easily enforce rights related to products and services (guarantees, insurance, etc.).

The Mainstreaming of Blockchain

As the roundtable participants concluded, blockchain technologies will reach their tipping point only if they can prove their business value. Design thinking workshops with senior business leaders should be the first step to identify opportunities and win sponsors for projects.

Success stories about significant business benefits achieved will take blockchain out of the innovation labs. This will require serious design and implementation work in integrating blockchain solutions with core enterprise systems.